SINGLE OR MULTIPLE SUPPLIERS

  

SINGLE OR MULTIPLE SUPPLIERS

To determine the right suppliers is very important to a firm whether nationally or internationally.  This is the critical stage to many firms for running a business. Every single company in this world faces the same problem neither big or small company but some are considered to choose single or multiple suppliers. Both have their own advantages and disadvantages.

Single sourcing is determining a supplier for supplying the raw materials, part of components or purchased parts. A few suppliers are be determined that can supply the supply based on the company`s demand and need. A supplier will  be chose among of those supplier that send the quatation. For example, Proton only uses Silverstone as the one and only tyres supplier.

Single sources be able provide lower costs per unit by reducing the duplication of operations in areas such as setup.It also provides long-term contact around 3-5 years between the seller and buyer that ensure the supplier does not lose the business during this time to another competitors. The contract makes the supplier willing to invest in new equipment or change their operating method to accommodate the buyer. Cooperation and communication increases between buyer and seller with it.

Multiple sourcing refers to the number of supplier that a buying firm has that more than one supplier. The buyer tries to gain competitive advantage among those suppliers who can provide the best products within reasonable price. The buyer choose the outcome among the suppliers and the suppliers come out with reverse auction to get the buyer attention.

Multiple sources can guarantee an undisrupted supply of parts. If something goes wrong with one supplier such as a strike, a breakdown or natural disaster, the other suppliers can pick up the slack to deliver all the needed parts without a disruption. Second, multiple sources provide improvement market intelligence and improvement of supplier appraisal effectiveness. The buyer can  abreast  the new development and new technologies as they emerge across the field.

There are two mains categories of suppliers evaluation which  process-based evaluations and performance-based evaluations. The process-based evaluation is an assessment of the suppliers` production or services process. the performance-based evaluation is an assessment of the supplier's actual performance on variety of criteria.

The suppliers will be evaluate by some systems, categorical method, cost-ratio method and linear averaging. Those methods are very important in determining the right suppliers to the buyer' performance.